asked the Minister for Finance if he will make a statement on Government exchange rate policy.
Ceisteanna — Questions. Oral Answers. - Exchange Rate Policy.
21.
When it was decided in 1979 to join the European Monetary System (EMS), Ireland, in common with the other EMS members, undertook to respect the rules and obligations which had been agreed and which were designed to bring about a zone of monetary stability in Europe. The objective of the Government's exchange rate policy is, accordingly, to keep stable the value of the Irish pound consistent with our EMS obligations. This has been the policy of successive Governments and it has been a major factor in the fall in the annual average rate of inflation from more than 20 per cent in 1981 to 5.4 per cent in 1985 and even less I hope in 1986. Policy on the exchange rate is well established, has been quite successful and the Government see no reason to change it at this stage.
In view of the impact that the currency rates have on the domestic money market, and interest rates, will the Minister acknowledge that it is essential that the Government at this point formulate an effective exchange rate policy which we did not get from him today, particularly having regard to the fact that the currency speculation we were discussing earlier is becoming a feature and that the interest rates are so penal because of the appreciation of our currency against sterling, for instance? Having regard to the effect on our manufacturing sector with which the Minister is very familiar, will he agree that the burden on exporters who are trying to compete across exchange rates is, frankly, unfavourable to the export market? In view of that is it not time we had a clearer statement of Government policy in this direction?
I made a statement of what Government policy is.
I could have enlightened the Minister on that. The only statement we got related to our joining the EMS. I was Minister for Foreign Affairs at that time.
The Deputy was seeking the information.
It was a Fianna Fáil Government that joined the EMS. If the Minister has outlined the only policy the Government have in relation to this it is a very poor one. Is the Minister not aware of the problems being caused to manufacturing industry in view of the value of our currency against sterling or the US dollar? Is the Minister not aware of the pressures being put on our interest rates which, in turn, impinge on industry and the cost of servicing enterprises? Will the Minister give some indication or hope to the enterprises of our economy that the Government propose to take some action? Now that the Taoiseach has arrived in the House I should like to ask the Minister to address himself to a statement by the Taoiseach in December 1982 in the House in which he said that the Government kept interest rates down.
That is repetition.
If the Government kept interest rates down then I should like to ask them to do something similar now.
The Deputy should have some respect for the Chair.
The fact is that we have been in the European Monetary System since 1979. Everybody in business knew that that would have certain implications in so far as the way in which our currency was likely to move, in other words, that it would move in conjunction with EMS currencies. It is not something that should have caught anybody by surprise. We broke the link with sterling at that time, a very deliberate decision taken in order to join the EMS. It has certain implications for business people and they have had since 1979 to study how it affects their firms. Sterling has tended to fluctuate quite a bit. It has reached its present level on two occasions since we joined the EMS and has gone down again. The message essentially of this experience is that businesses should seek to diversify their markets while continuing, of course, to seek profitable markets in the sterling area. They should do as much as possible to develop export markets in other areas also. That is something that has been very much conscious Government policy since 1979 and all State agencies, particularly Córas Tráchtála, have bent their efforts to assist firms and ensure that they do not rely to an unhealthy extent on the British market. If I was to be asked to criticise traditional manufacturing industry in Ireland one criticism I would have to make——
The Minister is not dealing with the exchange rate policy as mentioned in the question.
——is that they tended to rely unduly on the British market.